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IAI Actuarial Core Principles · Business Management · Trusts and agency

Dinesh pays Rs 30 lakh to Kavita to buy shares for him, but Kavita instead purchases a plot of land in her own name with that money and no intention of making a gift appears. A court holds that Kavita holds the land for Dinesh because the money was his and no gift was intended. Which type of trust has the court recognised?

The court has recognised a resulting or implied trust. It arises by operation of law, without any deed, because Dinesh supplied the money and no gift was intended, so the beneficial interest stays with him while Kavita holds the legal title to the land.

  1. AA resulting or implied trust arising by operation of lawCorrect
  2. BAn express trust created by written deed
  3. CA charitable trust for public benefit
  4. DA fixed trust created by statute for employees
  5. A discretionary trust created by the trustee's choice

Explanation

No deed or declaration was made, so the trust is not express. The law presumes the beneficial interest stays with the person who supplied the money where no gift was intended, which is a resulting (implied) trust arising by operation of law. Nothing suggests a public purpose or statutory source.

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